crypto

The prices of major crypto assets have recovered somewhat over the course of the last few weeks, as bullish sentiment has returned to the markets after over a year of a brutal bear market. All isn’t clear just yet, but there are many reasons why some speculators are beginning to grow excited once more about the possibility of a strong recovery in the Bitcoin and crypto markets.

US economic data to be released later this week

Later this week, the US are to be releasing several of their latest rounds of economic data, which usually have a large bearing on the markets as they either validate or invalidate what many of the speculators were thinking.

The US PMI data – today

The first set of data that is scheduled to be released in the US PMI data, which is expected to show that the US economy is in contraction and that GDP is falling.

The Purchasing Managers Index is based on a series of queries sent to companies across the US, and all indications thus far have been that the economy is in decline, and the market is already beginning to price this in.

Personal income and personal spending data – January 27th

Personal income and personal spending data is an important data set that is schedule to be released on the 27th January.

This set of data is particularly important for gauging future GDP projections, as personal spending is directly related to the consumption aspect of the GDP figures.

This data is also expected to show that aggregate demand across the economy has been falling as of late.

Case Shiller home price data – January 31st

The Case Shiller home price data is one of the most important data sets when it comes to gauging the health of the US housing market, and is expected to show that the situation is also dire, with the housing market struggling at the moment.

The number of defaults has been steadily rising and the number of people who have been buying homes has significantly reduced over the last few months.

This data set is expected demonstrate that the US housing market is in the midst of the early stages of a crisis.

ISM manufacturing data and FOMC meeting – February 1st

the ISM manufacturing data is scheduled to be released on the 1st February. This is an extremely important data set as it demonstrates how industries are coping with the rising costs and inflation.

February 1st is also the day of the FOMC meeting, but it is highly likely that the Federal Reserve will already have made up their minds about which direction they will go in terms of interest rates, as the ISM data releases at 08:30 EST and the FOMC meeting takes place at 14:00 EST.

Why is this bullish for crypto?

The US economy appears to be decline, and according to analysts such as David Murrin, this decline is terminal. Even if Chairman Powell were to now lower interest rates to try and pump the market, there isn’t enough productivity in the system to sustain the high valuations in the stock market.

However, he will still be forced to eventually make the decision to pivot, and a lot of analysts believe that he will pivot sooner rather than later, and that he won’t raise rates further at the FOMC meeting.

If this is true, and he doesn’t raise rates by the 25 basis points that many have predicted, then the markets may take this as an indication that the Federal Reserve once more has the intention to inflate their problems away, and markets will recover bullishly – particularly in risk on assets, such as in crypto.

It remains to be seen exactly how this will pan out, but the solutions to a falling US stock market from the perspective of the Federal Reserve are likely to have a positive impact on the Bitcoin and crypto markets moving forward.

Of course, it is always possible that Powell sticks to his guns (as he has said that he would), in which case the crypto markets could reasonably be expected to continue suffering in the short term.

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